Institute for Dynamic Economic Analysis

The Seattle-based start-up nonprofit Institute for Dynamic Economic Analysis (IDEAeconomics), opened its virtual doors officially May 9. Under the leadership of Steve Keen, IDEA has been organized to channel support for the work in dynamical analysis and real world money and to help mobilize the broader effort to reform economics. Pre-opening emphasis has focused on gathering resources for a couple of big projects, providing economists with practical data and analysis tools, and finding ways to bring the discussion to the broader public, through media and other means. The gap between this this quasi-science and a rigorous, evidence-based discipline is not widely appreciated.

Prof. Keen is known for his approach based on endogenous money and dynamic systems. His classic Debunking Economics is a comprehensive critique of the neoclassical approach. As most of the readers here know, he was cited by RWER with the Revere Prize for being the economist who most correctly predicted the Great Financial Crisis. Steve is currently engaged in the enormous effort of drafting Finance and Economic Breakdown, which will carry the theory to its conclusion and expand the dynamical analysis and critique.

The second very large project in hand is the full development of Minsky, the dynamic economic modeling software Steve designed and being developed by Russell Standish, which incorporates endogenous money and dynamics, and which features the Godley table, a realistic accounting for money flows. Minsky 1.0 is available for download. It is a truly unique tool that puts dynamics and endogenous money, and thus real world assumptions, into practical analysis. This and the other tools from IDEA are free and open source.

IDEA is by no means alone in its goal to reform of economics into a coherent, empirically sound and theoretically consistent discipline. A great number, including those in the World Economics Association share it. Steve’s efforts are a significant contribution, and IDEA intends to provide him the platform for his theoretical work, but we also intend to support and enable his facility with media and live audiences, and help bring this essential discussion to a wider constituency. Many of the other projects and activities of IDEA have this aim, and are executed with the talent we can organize.

For research — in addition to the Minsky project — IDEA has developed the TSL/IDEA Data Store. Conceived and designed to assist Steve in his work on debt, TSL has expanded and is now in its demonstration phase. The acronym TSL stands for “Time Series Language.” It is a simple script language which allows sophisticated retrieval and manipulation of data. It functions similarly to the FRED tools, but offers more operations. The companion IDEA Data Store also allows more powerful research than available elsewhere, since it is based on an OLAP structure, as opposed to a relational structure. While the content of the Data Store will never rival that of FRED, it does come with a distinct advantage — data can be entered by the user and then manipulated and displayed with the tools. A unique or idiosyncratic series can be uploaded into the Data Store through a simple online interface, manipulated with TSL in the context of the powerful OLAP structure, and the results downloaded, all online. TSL and the Data Store are fully functional, but limited by the extent of the data. Populating the database is a nontrivial task, and there is an additional ongoing (much more modest) monitoring function that is looking for collaborators.

The mission of IDEA is to reform a broken science. A good deal of that effort is educational. The World Economics Association and its organs are doing yeoman’s work, with members often sacrificing academic careers for intellectual integrity. IDEA will collaborate as much as possible with the economists represented in the WEA, and hopes to bring their work to some underserved constituencies.

The first constituency is a growing group of highly educated people from outside the profession, from mathematics, engineering, climate science, the arts, labor and education. (One could add a contingent from the finance profession, where people deal with serious decisions in the context of an education which did not include many of the situations in which those decisions must be made.) These people realize something is seriously wrong, and economics is it. Often they are time-constrained or simply lack the patience to traverse the minutia and balance the arguments. The second constituency is the new student, who will benefit from an easily understood critique at the outset of his or her training to the extent it prevents credulous acceptance of a one-dimensional curriculum. The third constituency is the general critical-thinking public who accede to the profession an authority it does not deserve, often repressing their own intuitive understanding.

These constituencies are also the targets of several projects, including Econ101R (R for “remediating,” as in remediating the traditional instruction) “A Pundit’s Guide to Economics” (a book-length dash through economics purportedly for the benefit of media talking heads), and materials introducing dynamics in non-math terms, with more in the queue awaiting further development. IDEA also provides connections to the economics and economists represented on our advisory board: Ann Pettifor, Michael Hudson, Edward Fullbrook, Dirk Bezemer and James K. Galbraith.

To change economics, it is essential to support and collaborate with serious economists doing disciplined analysis. That group is well represented here at the WEA. In IDEA’s case, it is furthered considerably by the theoretical work of Steve Keen and by the analytical tools we are developing and disseminating. But there is no good example of a reform without the participation of a broader, though not necessarily universal, understanding. ) understanding. The orthodoxy will fail as its underpinnings crumble, but that cannot take forever. There is an urgency to current conditions that does not allow complacency. When crisis comes, as we have seen, the opportunity is sometimes brief. When people look for answers, they need to be available within their communities and institutions. IDEA hopes to do its bit in that preparation.